The four big economic indicators and how they affect the Average Joe

Most of the time, we let the politicians deal with the economics. However, for every financial news story that is played on television, there’s every chance that it will affect the average consumer in some shape or form and there are ways to react to this.

When we talk about reacting, you don’t have to have the knowledge of someone like George Bardwil to make a difference. Most of the time, where there are financial reports broadcast, it just takes a simple change in approach to your own personal finances to make sure that you aren’t adversely affected.

Following on from the above, let’s now take a look at four of the biggest economic indicators and how they affect the average member of the public.

Inflation

If you’re the type of person who likes to invest, inflation is something which can hit you hard. When inflation levels raise, it means that purchasing power is limited. Ultimately, any rates of return are diminished.

Bearing this in mind, you need to alter your investment strategy. Anything such as fixed deposits won’t yield any decent returns over this period, if you’re looking to come out on top you’ll need to turn to something like gold or equities.

GDP

This is one indicator that we’re taught from a young age and it also happens to be one which is regularly featured in the media.

Suffice to say, the lower the GDP, the bigger the impact on those who are looking for a job.

It means that you have to adopt something of a safety-first approach. For most people, this could mean that it’s an idea to start to save more of your income, rather than spend.

Stock market indices

Again, this is going to be something which is probably more likely to affect those consumers who opt to invest in the stock market.

It’s on these occasions where it can be very tempting to attempt to react to the market falling, and perhaps try and cut your losses. Market volatility should be expected and while there might be times where you should look to move on stock, on most occasions a better approach is to stay put and let things settle over time.

Exchange rate

This point will come as absolutely no surprise to any reader, particularly as the media are placing so much attention on it right now. If the local currency depreciates, there’s every chance that inflation will occur and cause the issues that we have already spoken about.

There is also the knock-on effect for those individuals who like to travel. Unsurprisingly, a depreciation in the local currency is going to make such excursions much more costly. It can mean, as we’ve seen in the current climate, that compromises sometimes have to be made in relation to vacations.

There is even a wider issue surrounding the education system here. With more opportunities arising for students to study overseas, it can become difficult for them to adopt to such plans due to the poorer exchange rate.

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